CENTRE FOR CONTINUING EDUCATION

EXECUTIVE MBA
(OIL & GAS MANAGEMENT)

ASSIGNMENT - 1

BATCH: 2009 JULY

SEMESTER: 3 SEMESTER
RD

NAME: _______________________

ROLL NO: _______________________

ASSIGNMENT

FOR

QUANTITATIVE TECHNIQUES FOR

MANAGEMENT APPLICATIONS – MBCQ 721

UNIVERSITY OF PETROLEUM & ENERGY STUDIES

 QUANTITATIVE TECHNIQUES FOR MANAGEMENT
APPLICATIONS MBCQ 721

Attempt All Questions Max

Marks 100

Q1 Distinguish between the following; [5 x2=10 Marks]

a. Mean and mode
b. Standard deviation and coefficient of variation.
Q2. The Manufacturer of a particular brand of car claimed that the car claimed that
the car gives a mileage 0f 22 Kms. Per litre of petrol. A random sample or drivers gave
the following information in respect of mileage achieved during the first six months of
driving a new car. Average ( X ) = 21.6 km and sample standard deviation of 1.2
km.Confirm the claim through appropriate test of significance at 5% level of
significance. [5 marks]

Q3. Discuss the ‘ Hungarian’ method of solving an assignment problem. (10 Marks)

Hungarian Method
The pre condition for solving the assignment models is that
matrix must be a square matrix i.e. number of rows and
columns should be equal.

In case of unbalanced problem, add dummy row (column) so

as to make it square matrix.

Steps
I. Subtract the smallest element of the row from all the
corresponding elements of the row and repeat this for
each row.

II. Repeat the same step for all the columns.

III. Start making the assignments by considering the rows

first. Start from the first row and see if any single zero
is there, if it occurs, make an assignment (square over
that element) there and strike off any other zero in that
column and continue the same for other rows.

IV Repeat the same procedure as mentioned in the previous

step for the columns till all the zeros are either assigned
or strike off.

V Count the number of assignments, if it is equal to number

 of rows/columns, the optimal solution is obtained.
Otherwise, go to step VI.

VI Draw the minimum number of lines (horizontal and

vertical) as given below:

(a) Mark all the rows that do not have assignments.

(b) Mark all the columns that have zero in the marked
row.

(c) Mark all the rows that have assignments in marked

columns.

(d) Repeat above steps from a) to c) until no more rows/

columns can be marked.

(e) Draw straight lines through unmarked rows and

marked columns.
VII Select the smallest element from all uncovered
elements. Subtract this smallest element from all the
uncovered elements and add it to the element which
lies at the intersection of two lines.

*The above procedure is applicable for the case of

minimization. In case of maximization, the profit matrix is
converted into the cost matrix by subtracting all the elements
from the highest element of the matrix.
Q4. Explain systematic and stratified sampling methods. (10 Marks)

Systematic Sampling

The systematic sampling also employs the principle of

random sampling. However, in this method of sample,
selection of a unit depends upon the selection of a preceding
unit in contrast to simple random sampling, where the
selection of a unit is independent of each other. Systematic
random sampling in this sense is called quasi-random-
sampling.

Systematic Sampling in Practice

The method followed in systematic sampling is simpler as

compared to simple random sampling.

For selecting a sample size of 50 out of 500 the procedure is

as follows:

Step I Find simple fraction K = N/x

When N is total of units of population and x

is the sample size.

500
= 10 in this case
50

Step II Select a number between 1 and 10, at

random, say 9.

Step III Then, the sample comprises of nos.

9, 19, 29, 39, ...............................489, 499

Only the first unit has to be selected and the selection of

remaining numbers is easy.

Limitations

If the sample frame has any periodicity that parallels the

sampling rates, then the possibility of a strong bias is there.
For example, in banking transactions if you choose 1/7, 1/14,
etc., then you will be having same day of the week for your
study and hence your study will be a biased study. Be it,
Monday or Wednesday or Friday etc.

Similarly, if the frame is arranged in a way-ascending or

descending order of some attribute, then the location of the
first sample element may affect the result of the study. In
such cases, one should devise ways to qualify the effect of
bias.

On the other hand, if the frame is so arranged that similar

elements are grouped together, then systematic sampling
produces almost a proportional stratified sample.
These samples are statistically more efficient as compared
to simple random sampling.

For estimating the precision of the results, systematic

samples are treated as simple random sample and perhaps
is the most widely used method among the probability
sampling designs.

Stratified Random Sampling

Another useful type of sampling procedure is called
stratified random sampling. In this procedure, the members
of the population are first assigned to strata or groups, on
the basis of some characteristic and a simple random sample
is drawn from each stratum. The individuals in all the
samples taken together constitute the sample from the
population as a whole, viz.
Stratum Number in stratum Number in sample
1 N1 n1

2 N2 n2

3 N3 n3

4 N4 n4

5 N5 n5

6 N6 n6

7 N7 n7

k Nk nk

Total N n

If the component sample sizes n , n ,.................n are so chosen

1 2 k

that,
152 no formula
In this way we do proportional stratified random
sampling.

Stratification does not mean absence of randomness. All it

means is that the population is first divided into certain
strata that are mutually exclusive and collectively
exhaustive.

Populations divided into three (3) strata s , s , s .

1 2 3

A stratum, as is clear, is a sub-population which is more

homogenous than the complete population. The members of
a stratum are similar to each other.

Example 6.1
Suppose, the population consists of 45,000 households,
divided into five (5) strata on the basis of monthly income.
This can be illustrating as below:

0 - 1000

1001 -5000
 5001 - 7500

7501 - 10,000

Above 10,000

Then.,

a. Find out the number of units from each strata if the sample constitutes 1% of the

population
If selection is for 150 items selecting equally from each strata, find out the number of
sample unit from each strata
Solution

A Proportional stratified sampling

Population (No of Sample Sampling

Stratum No. households) (proportionate) ratio
(i) (ii) (iii) 1%=.01

15,000
0-1000 150 .01
12,000
1000-5000 120 .01
9,000
5001-7500 90 0.01
6,000
7501- 60 .01
3,000
10,000 30 .01
45,000
> 450 .01

10,000

b. Equal from each strata:

Total No. of sample units = 150
No. of sample units from each stratum = 150/5
= 30
Sampling ratio = Sample size / Population size
Q5. From past experience it is known that a machine is set up correctly on 90% of
occasions. If the machine is set up correctly then 95% of good parts are expected but if
the machine is not set up correctly then the probability of a good part is only 30%. On a
particular day the machine is set up and the first component produced and found to be
good. What is the probability that the machine is set up correctly? (10 Marks)
Q6. Examine the following statements and state if they are true or false. Briefly justify
your choice: [15 Marks]
( a) The' probability that it will rain today is 0.65 and probability that it will rain or
snow is 0.55 .
(b) Standard deviation of a data set can be sometimes negative or zero
(c) For a normal distribution mean, mode, median are same
Q7. Ten Observations made on the octane rating 0 gasoline gave the following results:
[10 marks]
98, 96, 97, 94, 93, 93
99, 90, 102,95, 94, 88
(a) Obtain a point estimate of the population true mean rating
(b) Establish 95 % confidence interval for the true mean rating.
Q8. Explain what is meant by Testing of Hypothesis and Types of Errors faced while
making a decision based on a sample data’[10 marks]

Q9. The table shows the amount of sales (in Rs.l 000) Y, made by each of the eight
sales persons and [20 marks]
number of years of sales experience (X) for each of them

X: 6 5 3 1 4 3 6 2
Y: 9 6 4 3 3 5 8 2
(a) Find the linear regression for the sales on the experience or sales persons.
(b) Predict the expected sales if a person has 10 years experience.
(c) Give the increase in sales for each additional year of experience.
(d) Find the correlation coefficient and coefficient determination and interpret the
results.

Regression Definition:
A regression is a statistical analysis assessing the association
between two variables. It is used to find the relationship between two
variables.

Regression Formula:
Regression Equation(y) = a + bx
Slope(b) = (NΣXY - (ΣX)(ΣY)) / (NΣX2 - (ΣX)2)
Intercept(a) = (ΣY - b(ΣX)) / N

where
x and y are the variables.
 b = The slope of the regression line
a = The intercept point of the regression line and the y axis.
N = Number of values or elements
X = First Score
Y = Second Score
ΣXY = Sum of the product of first and Second Scores
ΣX = Sum of First Scores
ΣY = Sum of Second Scores
ΣX2 = Sum of square First Scores

To find regression equation, we will first find slope, intercept and use
it to form regression equation..

Step 1: Count the number of values.

N=5

Step 2: Find XY, X2

See the below table

X X*Y X*X Y*Y

Y Values
Values
6 9 54 36 81
5 6 30 25 36
3 4 12 9 16
1 3 3 1 9
4 3 12 16 9
3 5 15 9 25
6 8 48 36 64
2 2 4 4 4
Step 3: Find ΣX, ΣY, ΣXY, ΣX2.
 ΣX = 30
ΣY = 40
ΣXY = 178
ΣX2 = 126

Step 4: Substitute in the above slope formula given.

Slope(b) = (NΣXY - (ΣX)(ΣY)) / (NΣX2 - (ΣX)2)
= ((8)*(178)-(30)*(40))/((8)*(126)-(30)2)
= (1424 -1200)/(1008 -900)
= 224/108
= 2.07

Step 5: Now, again substitute in the above intercept

formula given.
Intercept(a) = (ΣY - b(ΣX)) / N
= (40 – 2.07(30))/8
= (40 – 62.1)/8
= -22.1/8
= -2.7625

Step 6: Then substitute these values in regression

equation formula
Regression Equation(y) = a + bx
= -2.7625 + 2.07X.

Suppose if we want to know the approximate y value for

the variable x =6. Then we can substitute the value in the
above equation.

Regression Equation(y) = a + bx
= -2.7625 + 2.07(6).
= -2.7625 + 12.42
= 9.6575
(b) Predict the expected sales if a person has 10 years experience.
X=10
Regression Equation(y) = a + bx

Y= -2.7625+2.07*10
= 17.9375
D

The strength of the relationship between the two variables in the regression equation is
the correlation coefficient, r, and is always a value between -1 and 1, inclusive.

The regression coefficient is the slope of the line of the regression equation

The coefficient of determination, R squared, is used in linear regression

theory in statistics as a measure of how well the regression equation fits
the data. It is the square of R, the correlation coefficient, that provides us
with the degree of correlation between the dependent variable, Y, and the
independent variable X. R ranges from -1 to +1. If R equals +1, then Y is
perfectly proportional to X, if the value of X increases by a certain degree,
then the value of Y increases by the same degree. If R equals -1, then
there is a perfect negative correlation between Y and X. If X increases,
then Y will decrease by the same proportion. On the other hand if R=0,
then there is no linear relationship between X and Y. R squared varies
from 0 to 1. This gives us an idea of how well our regression equation fits
the data. If R squared equals 1, then our best fit line passes through all the
points in the data, and all of the variation in the observed values of Y is
explained by its relationship with the values of X. For example if we get an
R squared value of .80 then 80% of the variation in the values of Y is
explained by its linear relationship with the observed values of X.

Step1
Calculate the sum of the product of the values of X& Y & multiply this by
“n”
S1=n(‘XY)-(‘X)(‘Y) where ‘XY=sum of product of XY
‘X=sum of values of X
‘Y=sum of values of Y
S1=8(178)-(30)(40)
=1424-1200
=224
Step2
P1=n(‘X*X)-

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